BP says world oil demand to peak

An undated file photo of a BP station in London. World oil production may peak in the coming years, but it will be because of a decline in demand for petroleum rather than constraint on supply, a BP economist said on Wednesday.

Reuters/Russell Boyce

LONDON World oil production may peak in the coming years, but it will be because of a decline in demand for petroleum rather than constraint on supply, a BP economist said on Wednesday.

The comments come in the wake of remarks from other industry officials who in recent months have questioned mainstream supply forecasts, suggesting a peak in output may be closer than the industry has previously admitted.

"I believe there is a realistic possibility that world oil production will peak within the next generation as a result of peaking demand," BP Special Economic Advisor Peter Davies told a meeting at parliament organised by a group of lawmakers looking into peak oil.

A rally in oil prices, which hit a record high above $100 a barrel earlier this month, is leading to growing interest in peak oil -- the view that supply has reached, or will soon reach, a high point and then fall.

London-based BP, the world's third-largest fully publicly traded oil company by market value, dismisses the view that there is a problem with the amount of oil left in the ground.

Statistics complied by BP show the world has proven oil reserves of 1.2 trillion barrels, enough to sustain current output for 40 years.

Rather, Davies said environmental regulations, including efforts to reduce greenhouse gas emissions, could cause consumers to move away from oil.

"I think we will run out of demand before we run out of supply," he said. "There's a distinct possibility that global oil consumption could peak as a result of climate policies."

The BP economist said there were also concerns whether there is enough investment. Many major producing countries ban foreign investment in their oilfields or allow it on terms the oil firms deem uncompetitive.

"An imminent peak in oil production is not likely," Davies said. "Valid concerns remain over investment, especially in resource-rich regions."

Davies said it was possible to boost world oil production to 100 million barrels per day, a rate senior figures, such as the chief executive of French oil company Total (TOTF.PA), have questioned in recent months.

The world is expected to need more than 100 million bpd of oil later this century, according to forecasts from the International Energy Agency and others, up from around 86 million bpd now.

"I believe 100 million barrels per day is achievable," Davies said. "This is achievable in resource terms but it does come down to how much investment is going to take place."